blackcat, it sounds like the kind of reading tutoring that you were doing was primarily focused on increasing fluency, rather than decoding skills.
Neither phonological processing nor phonics development stops in the first grade. Unfortunately, it is not uncommon for group interventions to stop at that point. Decoding interventions break down the basic phonemes of the language, and the basic graphemes. Some programs teach them in order of frequency, while others attempt to group them conceptually. All of the OG-based systems use explicit, incremental, multisensory instruction in phonological awareness and phonics, and repetition. They should be individualized (though some schools run interventions as small group, which limits individualization).
After all of the phoneme-grapheme pairings are mastered, if a student is still laboring, then one can embark on fluency exercises, such as those you described.
And they don't even have to be gifted to get passed over for evaluation. I've identified high school students with severe deficits in word-level decoding (aka, dyslexia) in the context of average intelligence, with no known history of formal educational supports.
